Forest Software
Web, SEO and IT & Business Advice for the Smaller Business
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One of the biggest problems to many small business owners is how to price their products or services. This article aims at listing some of the problems of pricing the service or product too low and presents an alternative
The problems with price reductions
- Decrease net profits
- Lead to the purchase of lower quality products
- Increase customer demands to drop the price even lower
- Require even more sales to make up the difference in revenue
- Need a larger quantity of products
Often, prospective customers turn round and say, “I would buy it if it were in my price range.” and this tempts many business owners to lower their prices – just to sell more products without any thought about the consequences listed above.
As a business you need to find real benefits or value that you can use to sell to your customers and prospects. Help them to see how much their life will be better (for example your house will be warmer if you use our “triple K” double glazing) or how your can help them in their business (we can get your site up the search engines meaning that you get more visitors and therefore more clients) if they use your product or service, and you’ve got a customer. Point out their current problem, tell them how you can solve it, and often the prospect will do anything to get rid of it.
Remember that price is not a benefit. Selling is not determined on the cost of your product. If you truly “sell” to you your customers and prospects, they will purchase your products/services no matter what price you determine (think of Rolls Royce and other luxury cars for example).
If a customer or prospect doesn’t buy…and they claim the cost had something to do with it…you can guess they probably wouldn’t have purchased anyway and this is normally because they are either not yet ready to buy or are not looking for the product or service that you are providing.
As a marketer, your job is to sell your products or services. The actual science of selling has nothing to do with the price of the product. By the time your contacts find out about the price, they should be determined to purchase no matter what the cost.
So rather than reducing your prices keep them at the same level and alter your marketing after all, if you have marketed correctly, you will still have customers keen to do business with you.
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Last updated on November 12th, 2010 at 02:59 pm
As any business owner will know, an inevitable part of business is staff turnover. This can cause many businesses a real problem unless there has been a good handover between the member of staff that is leaving and the replacement.
It doesn’t matter whether it is a member of staff going on maternity/paternity leave, taking a sabbatical, being seconded elsewhere withing your business, or leaving the business all together you need to make sure that the replacement(s) knows about all the tasks being done. Don’t forget that in a small business people may do several tasks that were not part of their original job (for example in one company I worked for my “un-contracted tasks” included resetting the time switch on the heating when the clocks went back and forwards twice a year).
Ideally the handover should be structured and should include both a written document and a face-to-face meeting where the document is gone through and questions can be asked. The document should include things such as a description of what the employee does, any processes used, deadlines, key contacts, any ongoing issues, details of log-ins and passwords, where keys and documents are kept and anything else that is needed to ensure that the new person can pick up the job as quickly as possible.
Ideally the incoming member of staff should spend a few hours with the outgoing person, you might even want to consider a short time of shadow working where the new person watches exactly what is done and can ask questions. If it is the case that the outgoing person is leaving your business and is being replaced by a new employee could you bring the new employee in a couple of days (or even a week) early to allow this to happen?
The handover document should really be started as soon as the intention to leave is announced, from the authors experience this is can easily take several hours (or days even depending on the job) even to type up everything that is done and the other information mentioned above.
As an employer it is up to you to ensure that staff that are leaving, for what ever reason, know that they will be expected to produce a handover document and possibly have a handover meeting. You need to give the outgoing employee time to do this, after all if they rush the process they may leave out an important piece of information that only they know, and how would that affect your business?
If you have an HR department it should be able to advise you of the amount of time that it feels should be allocated to a handover and may even be able to provide a template. It will probably want to keep a copy of the hand-over document on file as this could be used in the future as a basis for a job description.
Hopefully by following the simple advice above you will ensure a smooth staff handover when members of staff move on.
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Last updated on November 12th, 2010 at 03:00 pm
Many small business owners will roll their eyes when talking about health and safety, not because they do not think it is worth while but because they read articles in the newspapers about silly things that are being stopped “because of health and safety”. We have all read these kinds of articles, for example “children are banned from playing tag in the playground”, “ladders are banned in workplaces”, “conkers being banned” and so on.
In the authors experience much of the Health and Safety rules can be common sense, for example I have read of prosecutions under the H&S legislation over people falling from ladders that are not secure or were put up at the wrong angle, of people standing on the forks of a fork lift truck and being lifted up to get items from high shelves, of people being injured after tripping over trailing cables and many other workplace related accidents. When you think about it, all of the above prosecutions could have been avoided – a simple case of training on how to use a ladder for example and making sure that the worker knows that it should be secured and at the right angle, or using a set of steps when getting items from high shelves or making sure that cables are either covered, are laid against a wall so that people can not trip over them or even are marked in hazard warning tape so are visible.
There are many elements to making sure that you do not fall foul of H&S laws, these range from carrying out risk assessements, eliminating problem areas, making sure that controls are in place right through to providing protective equipment. Really though it comes down to making sure that you are managing the risk to your employees, visitors to your workplace and clients. If you are not sure about the best way to do this I would suggest that you contact some health and safety consultants such as Stallard Kane Associates who are based in the East Midlands but have clients across the UK. They will be able to carry out assessments of your risks and general health and safety audits along with helping you to establish a health and safety management system that suits your business.
Reading Time: 4 minutes
Last updated on January 15th, 2011 at 12:02 pm
In my last post about using blogs as a marketing tool I said that I would discuss the merits and disadvantages of self hosting your own blog as opposed to using an off-site blog.
“Self hosted” and “off site”?
First of all, what do we mean by the terms “self hosted” and “off site”? A self hosted blog is one like our blog that you are reading, it is run on the same server as the main site and often forms part of the site using the same domain name. An off site blog is one that is hosted on a different server, is not part of the main web site and does not use the same domain name, a typical off-site blog would be ukaccountants.wordpress.com (in this case a WordPress blog) or the Official Google blog.
Pros and Cons of a self hosted blog
Here at Forest Software we decided to go with a self-hosted blog, this was done for several reasons, including :-
- The ability to tie the blog into the site very closely
- The ability to tweak the code as we felt fit (bearing in mind that some of the code could be overwritten at the next upgrade if we were not careful)
- The fact that it increases the number of pages and content of our site each time we post an article and is easier to do than creating a new page for the website.
- We plan to update the blog at least twice a week, thus keeping the site content fresh.
- By using the right plug-ins and additional software we have found that we can get Google and other search engines to our blog within seconds of the article being posted (our record is 17 seconds so far).
- Our servers were already running the right operating system and supported the right programming language for our selected blog software.
- Our domain and site is over 12 years old and has a certain amount of authority because of that. This means that the blog inherits some of that age and authority.
The drawbacks to this decision are :-
- We have to maintain the blog software applying updates when they are released
- We have to make sure that the underlying database is backed up or else we stand the chance of losing everything
- The categories and tags used in the articles only cross link to articles on our site, restricting the reach of the articles a little.
- The amount of disk space needed for the site increased when the blog was first installed and goes up every time an article is posted.
- There is the possibilty that you may have to pay for hosting if you do not already have a hosting account.
Off Site Blogs
Having said all of the above we sometimes recommend to clients that they operate off site blogs rather than try to use one on their own site. Much of the time this relates to the technical ability of the client but another factor is how often the blog will be updated.
The advantages of using an off-site blog include :-
- The software is automatically updated for you whenever patches to the blog system are released (these can be new functionality or security patches)
- Usually the underlaying database is backed up for you by the firm that hosts the blog for you
- Posts that use categories and tags are automatically included in generated pages based on these categories and tags meaning that your audience is much bigger (and increasing the chances that search engines and human visitors will find your “pearls of wisdom”).
- Search engines will see your off-site blog as having pages that are votes for your main site.
- There is no software to install on your web-server, this can be important for some people and may prove to be the reason for going “off-site” if for example you are running your website on a Windows server that does not have the correct programming language installed on it.
- A less frequently updated blog does not reflect so badly on your main site if it is not part of that site, people will not look at the blog section of your site and say “no updates in 3 months – is this a dead site?”.
- Many off-site blogs are hosted on a free service.
Of course, for every upside there is a disadvantage, these are some of the drawbacks of offsite blogs :-
- There is a limited number of templates that you can apply and you may not be able to create your own design, meaning that the blog may look different to your main site.
- The url of the blog will not be the same as the domain of your main site – this may confuse some visitors to your site and may hinder a “branding exercise” favoured by some marketeers.
- You may not be able to install all the additional software that you want for the blog.
To conclude
In the authors view, there are several factors you should consider before choosing which type of blog you want. These include how important the branding is on the site, do you have the technical ability to look after the blog software if needed, how often you are likely to update the blog (and you need to be realistic here – everyone starts off with good intentions but very many people decide that it’s too much effort or that they have nothing to say and the frequency of posts dies off).
By considering the options before you take the plunge and start your blog you can minimise the risk of deciding that you need to change from off-site to self hosted (or vice-versa) and the extra work that that would entail.
Reading Time: 4 minutes
Last updated on March 11th, 2013 at 03:38 pm
Bookkeeping and Accounting – What is the Difference?
As a small business owner you may be confused about the difference between the different types of bookkeeping and accounting, after all if you are keeping the financial books are you not doing the accounts?
Bookkeeping and Accounting
Both bookkeeping and accounting are of vital importance to the financial success of any business and may be carried out by the same person or by different people.
Bookkeeping is an important part of the accounting function and is the name given to the record keeping of the financial transactions, ie making a note of the money received and spent by the business.
Accounting, while incorporating the record keeping (bookkeeping) also includes the presentation, interpretation and the financial control functions including interpreting the numbers that show the financial health of a business (the profit or loss made in the month/quarter/year).
Bookkeeping stems from the recording of financial transactions in a book or ledger, although now days it is more likely to be on a spreadsheet or done using bookkeeping software.
The task of a bookkeeper (which some businesses decide to outsource to bookkeepers or their accountants) is to record the the sales, purchases and cash/bank transactions. All small businesses do bookkeeping, or else how would they keep track of income and expenditure? Many then use the bookkeeping records as a basis for an accounting function to generate financial reports.
There are two main methods of bookkeeping and which is used tends to be dependent on the size and type of the business.
Double Entry Bookkeeping
This is mainly used by medium and larger businesses. The name double entry comes from the fact that every transaction has a double effect on the business ( comprising a debit and a balancing credit) as the simple examples below demonstrate :-
- A sale is made. For example, a customer buys a product and pays by cheque, this transaction results in your bank account being increased and the value of your stock being decreased.
- A sale is made on account. In this case the transaction results in the debtors account (anyone that owes you money is called a debtor) being increased and the value of your stock being decreased. This differs from the example above in that your bank account is not increased (you have not been paid yet).
- A customer pays an outstanding invoice. In this case the transaction decreases the debtors account (remember in the example above we increased the debtors account) and increases your bank account.
- A purchase is made. For example, you buy a box of paper for your printer using money from your petty cash box, even though there is only one purchase, the transaction results in two accounts in the bookkeeping system being affected. In the above example the cash account balance would be reduced to show the amount of the purchase (your petty cash balance has gone down) and the stationery account would be increased to show that money has been spent in this category.
- A third type of transaction may be transfer of money between your bank account and your cash account – the petty cash box needs topping up. The bookkeeping transactions in this case is a debit to the bank account and a credit to the cash account.
An advantage of double entry bookkeeping is that since every financial transaction has an equal and opposite entry in the books there has to be a mathematical check that both sides of the transactions add up to zero. This process is called a trial balance where both sides of the entries should be in agreement and is often the point at which the bookkeeping process is deemed to be complete.
Double entry bookkeeping is required for all businesses that require to produce a statement of its assets and liabilities (e.g. Ltd companies that have to produce annual accounts) . This statement of assets and liabilities is the total of all the balances from the trial balance and is called a balance sheet.
Single Entry bookkeeping
Here in the UK the production of a balance sheet is optional for every self employed business (sole traders) as it is not needed to complete the self assessment tax return form. A sole trader’s bookkeeping system doesn’t have to produce a balance sheet because the business effectively belongs to the owner and is that owners personal business and money for tax purposes.
Single entry can be as simple as making a list of the sales income and the purchase expenses. Such a bookkeeping system is often easier for the the smaller business owner as it requires little or no bookkeeping or accounting knowledge. This means that sole traders can produce their own accounts without the need for a bookkeeper or accountant particularly if they have access to either bookkeeping software or a spreadsheet. Having said that you may decide that you would prefer to use an accountant to carry out your bookkeeping as they may be able to advise you about tax savings and other ways to save money.
If you do not have an accountant there are several ways to find them including this directory of local accountants, or this accountants blog that lists many accountants in different areas. Alternatively you might find what you are looking for on our accountants for small businesses page.